Oil pared losses as US stockpiles dropped to the lowest level this year and a rally in equities bolstered risk assets.
(Bloomberg) — Oil pared losses as US stockpiles dropped to the lowest level this year and a rally in equities bolstered risk assets.
West Texas Intermediate traded above $79, rebounding from an earlier plunge below $78. US crude inventories dwindled to the lowest since December 2022, according to a government report Wednesday, showing that supplies remain tight despite concerns about a potential slowdown in demand. Inventories at the nation’s biggest storage hub in Cushing, Oklahoma, slid the most since October 2021.
While the bullish stockpile report supports oil prices, the market moves are “all macro right now,” said Rob Thummel, a portfolio manager at Tortoise Capital Advisors.
Read more: Oil Stockpiles Slump From Low Levels as OPEC+ Cuts, Demand Bite
Earlier in the session, prices fell to monthly lows as the contraction in euro-area private-sector activity intensified in August. China’s stuttering economy also continues to threaten demand for global commodities.
Crude’s rally since late June has faltered over the last couple of sessions amid the worsening outlook in China and signs the Federal Reserve isn’t yet done with its campaign of monetary tightening. That has overshadowed a tightening market following supply cuts by OPEC+ kingpins Saudi Arabia and Russia.
Adding to bearish sentiment, observed exports from Iran have surged to 2.2 million barrels a day this month. Meanwhile, Turkey and Iraq have held a flurry of talks as they seek to restart a major oil pipeline, though they have failed to reach a breakthrough so far.
To get Bloomberg’s Energy Daily newsletter direct into your inbox, click here.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.